Either comes from 'prisoner of mother England' or pomigranite - a reddish coloured fruit that native Australians (Aboriginals) thought had a similar colour to the skin of sunburnt Brits.
Not meant to be an insult (as some English think for some reason), merely a nickname for our less-tanned former rulers. Nicknaming everything is very Australian.

A British person - or close equivalent to the species. Specialise in inventing sports and timing themselves on how long it takes before all of their former colonies can defeat them at it. Spelt P-O-M: the "Prisoner of Her Majesty" explanation is an urban legend, as is "Prisoner of Mother England", the other version of this common myth.

The best guess at this time is that "pommy" was based on the word "pomegranate" -- either because the redness of the fruit supposedly matched the typically florid British complexion, or because (like "Johnny Grant" - Jimmy Grant, surely?) it was used as rhyming slang for "immigrant."

Australian insult for an Englishman.
Came from the beginning of the country, when the Englishmen got very badly sunburnt whilst sunbathing, turning their skin a similar colour of a Pomegranite, an exotic red fruit.